Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 920,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.40. The market value of the company’s common stock at the end of the year was $24.00. All of the company’s sales are on account.Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets Current assets: Cash $ 2,772 $ 2,930 Accounts receivable, net 15,600 10,350 Inventory 10,300 8,680 Prepaid expenses 1,920 2,340 Total current assets 30,592 24,300 Property and equipment: Land 7,200 7,200 Buildings and equipment, net 20,400 20,200 Total property and equipment 27,600 27,400 Total assets $ 58,192 $ 51,700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 10,700 $ 8,900 Accrued liabilities 840 1,300 Notes payable, short term 420 420 Total current liabilities 11,960 10,620 Long-term liabilities: Bonds payable 7,500 7,500 Total liabilities 19,460 18,120 Stockholders' equity: Common stock 920 920 Additional paid-in capital 4,800 4,800 Total paid-in capital 5,720 5,720 Retained earnings 33,012 27,860 Total stockholders' equity 38,732 33,580 Total liabilities and stockholders' equity $ 58,192 $ 51,700 Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 91,000 $ 86,000 Cost of goods sold 58,000 54,000 Gross margin 33,000 32,000 Selling and administrative expenses: Selling expenses 9,700 9,200 Administrative expenses 13,200 12,200 Total selling and administrative expenses 22,900 21,400 Net operating income 10,100 10,600 Interest expense 900 900 Net income before taxes 9,200 9,700 Income taxes 3,680 3,880 Net income 5,520 5,820 Dividends to common stockholders 368 368 Net income added to retained earnings 5,152 5,452 Beginning retained earnings 27,860 22,408 Ending retained earnings $ 33,012 $ 27,860 Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)